VA Assumable Loans: How to Take Over a Seller's Low Rate

October 26, 2026•8 min read

VA Assumable Loans: How to Take Over a Seller's Low Rate

Mortgage rates are sitting above 7%. Freddie Mac's 30-year average was 7.32% on October 22, 2026. Meanwhile, about half of all outstanding mortgages in the country carry a rate under 4%, according to FHFA data for the second quarter of 2026. A lot of those low-rate loans belong to homeowners who will sell this year anyway.

If one of those homeowners has a VA loan, you may be able to take it over. Rate, balance, and remaining term included. It's called a loan assumption, and it's one of the most underused tools in the business. Here's how it works, what it costs, and what the math looks like in Nashville and Huntsville.

What is a VA assumable loan?

Every VA loan is assumable. When a home with a VA loan sells, the buyer can apply to take over the seller's existing mortgage instead of getting a new one. The interest rate stays the same. The monthly principal and interest payment stays the same. The loan simply changes hands.

The part that surprises most people: you don't have to be a veteran to assume a VA loan. A civilian buyer can assume one, as long as they qualify with the loan servicer on credit and income. FHA loans are assumable too, with their own rules, but this article focuses on VA.

How a VA loan assumption works, step by step

Find a home with an assumable loan. Listings don't always advertise it. Ask the listing agent whether the seller has a VA or FHA loan, the rate, and the approximate balance.
Write the offer with the assumption in it. Your agent should make the contract contingent on the servicer approving the assumption.
Apply with the seller's loan servicer. You'll send the same kinds of documents you would for a new loan: pay stubs, tax returns, bank statements, and credit.
Cover the equity gap. You can only assume the remaining balance. The difference between the price and the balance comes from your cash, a second mortgage, or both.
Close. VA expects servicers to make a decision within 45 days of receiving a complete package, but plan for a longer timeline than a typical 30-day close.

What a VA assumption costs

VA funding fee: 0.5% of the loan balance you assume.
Processing fee: VA caps the servicer's processing fee at $300 in most cases, plus the cost of a credit report. VA also allows a regional add-on for some assumptions.
Normal closing costs: title, recording, prepaid taxes and insurance, and so on. If you use a second mortgage, it will have its own costs.

Compared with paying points to buy a rate down from 7.32%, those costs are small. The bigger hurdle is usually the cash or financing needed to cover the gap.

Worked example: Nashville at $510,000

Greater Nashville's median price was $510,000 in September 2026. Say a veteran bought a home in late 2021 with a $430,000 VA loan at 2.75% for 30 years. After 60 payments, the balance is about $380,532, the payment is $1,755.44, and there are 25 years left.

The buyer puts 10% down ($51,000). That leaves a $78,468 gap to finance with a second mortgage. We'll use an example rate of 8.75% on a 20-year fixed second. Option A is a brand new 30-year loan at 7.32% with the same 10% down.

Nashville, $510,000	A. New loan at 7.32%	B. Assume 2.75% VA loan + second
Down payment	$51,000	$51,000
First mortgage	$459,000 at 7.32%, 30 years	$380,532 at 2.75%, 25 years left
Second mortgage	None	$78,468 at 8.75%, 20 years
Monthly P&I	$3,153.01	$2,448.86 ($1,755.44 + $693.43)
Interest paid, first 5 years	$163,690	$81,095
Blended rate	7.32%	About 3.78%
VA funding fee	Not applicable	$1,902.66

Option B saves $704.15 a month and about $82,595 in interest over the first five years. The funding fee pays for itself in under three months. With the full $129,468 gap in cash, the payment would simply be the seller's $1,755.44.

Worked example: Huntsville at $335,000

The Huntsville and Madison County median was $335,000 in September 2026. Say the seller financed $285,000 with a VA loan at 2.875% in late 2021. After 60 payments, the balance is about $252,802 and the payment is $1,182.44.

With 10% down ($33,500), the buyer needs a $48,698 second mortgage, again at an example 8.75% over 20 years.

Huntsville, $335,000	A. New loan at 7.32%	B. Assume 2.875% VA loan + second
Down payment	$33,500	$33,500
First mortgage	$301,500 at 7.32%, 30 years	$252,802 at 2.875%, 25 years left
Second mortgage	None	$48,698 at 8.75%, 20 years
Monthly P&I	$2,071.10	$1,612.79 ($1,182.44 + $430.35)
Interest paid, first 5 years	$107,522	$53,959
Blended rate	7.32%	About 3.82%
VA funding fee	Not applicable	$1,264.01

Option B saves $458.30 a month and about $53,563 in interest over five years. Lower prices mean a smaller equity gap, which is why assumptions can work especially well in Huntsville.

The catches nobody puts in the listing

Seller entitlement

If a non-veteran assumes the loan, the seller's VA entitlement stays tied to that loan until it's paid off. That can limit the seller's ability to use a VA loan on their next home. If the buyer is an eligible veteran, they can substitute their own entitlement and free up the seller's. Expect some veteran sellers to prefer a veteran buyer, or to want a higher price.

The equity gap

The older the loan and the more the home has appreciated, the bigger the gap. Not every servicer is quick to approve a second mortgage behind an assumed loan, and second mortgages usually carry higher rates. Run the numbers both ways.

Time

Servicers handle assumptions on their own schedule. You'll need a seller and a contract that allow for it. If you need to close in 30 days, an assumption is probably the wrong tool.

Liability stays with the seller unless released

Sellers should make sure the servicer formally releases them from liability when the assumption closes. That's a question for the seller's agent and the servicer before signing.

When a new loan is the better choice

The seller's balance is small compared to the price, so most of your financing would be on the expensive second mortgage.
The seller's rate isn't much lower than today's rates.
You need a fast, predictable closing date.
You'd qualify for a no-down-payment VA loan yourself and don't have cash for the gap.

How to find homes with assumable loans in Middle Tennessee and North Alabama

Ask. Seriously, that's most of it. Have your agent ask listing agents whether the seller has a VA or FHA loan and what the rate is. Homes bought or refinanced in 2020 and 2021 are the most likely to carry rates under 3.5%. Areas with large military and veteran populations, like Clarksville near Fort Campbell and the Huntsville area around Redstone Arsenal, are good places to look.

The bottom line

A VA assumable loan won't fit every deal. When it does fit, it can be worth hundreds of dollars a month. If you've found a home with a low-rate loan attached, or you want to know whether you'd qualify to assume one, send me the price and the seller's loan details. I'll run both options side by side for your numbers.

Call or text 615-899-CHAD (2423) or 256-509-8200, or email [email protected].

Illustrative examples only. Rates are examples, not quotes. Principal and interest only; taxes, insurance, mortgage insurance, and closing costs not included. Loan balances are calculated from the stated original loan amount, rate, and 60 on-time payments.

Chad Anderson · NMLS #372289
loanDepot.com, LLC · NMLS #174457 · nmlsconsumeraccess.org · Equal Housing Opportunity
840 Crescent Centre Drive, Suite 600, Franklin, TN 37067
chadwickanderson.com · [email protected] · 615-899-CHAD · 256-509-8200

Rates shown are national averages from Freddie Mac's Primary Mortgage Market Survey and other published sources. They are not a quote, an offer, or a commitment to lend. Your rate and payment depend on credit, loan amount, down payment, property type, occupancy, points, and other factors. Payment examples are principal and interest only and exclude taxes, insurance, and mortgage insurance. Example rates and scenarios are illustrative only. Loan assumptions require approval by the loan holder or servicer, and the buyer must qualify. Second mortgage availability, terms, and rates vary by lender. All loans are subject to credit approval and program guidelines.

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